In Re: Google Inc. Cookie Plac v.

PRECEDENTIAL

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

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No. 17-1480

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IN RE: GOOGLE INC. COOKIE PLACEMENT

CONSUMER PRIVACY

LITIGATION

Theodore H. Frank,

Appellant

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Appeal from the United States District Court

for the District of Delaware

(D.C. Civil Action No. 1-12-md-02358)

District Judge: Honorable Sue L. Robinson

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Argued November 14, 2017

Before: AMBRO, KRAUSE, and RENDELL, Circuit Judges

(Opinion filed: August 6, 2019)

Theodore H. Frank (Argued)

Adam E. Schulman

Competitive Enterprise Institute

Center for Class Action Fairness

1310 L Street, N.W., 7th Floor

Washington, DC 20005

Counsel for Appellant

James P. Frickleton

Bartimus Frickleton Robertson & Gorny

11150 Overbrook Road, Suite 250

Leawood, KS 66211

Stephen G. Grygiel

Silverman Thompson Slutkin & White

201 North Charles Street, Suite 2600

Baltimore, MD 21201

Brian R. Strange (Argued)

Strange & Butler

12100 Wilshire Boulevard, Suite 1900

Los Angeles, CA 90025

Counsel for Appellees:

Jose M. Bermudez;

Nicholas Todd Heinrich;

Lynne Krause.

Anthony J. Weibell (Argued)

Wilson Sonsini Goodrich & Rosati

650 Page Mill Road

Palo Alto, CA 94304

Michael H. Rubin

Wilson Sonsini Goodrich & Rosati

2

One Market Street

Spear Tower, Suite 3300

San Francisco, CA 94105

Counsel for Appellee,

Google Inc.

M. Duncan Grant

Pepper Hamilton

1313 Market Street

Hercules Plaza, Suite 5100

P.O. Box 1709

Wilmington, DE 19899

Joseph A. Sullivan

Pepper Hamilton

3000 Two Logan Square

18th and Arch Streets

Philadelphia, PA 19103

Counsel for Amicus Curiae:

Association of Pro Bono Counsel;

Community Legal Aid Society Inc.;

Community Legal Services;

Legal Services of New Jersey;

National Legal Aid & Defender Association;

Pennsylvania Legal Aid Network;

Philadelphia Bar Foundation.

Oramel H. Skinner, III (Argued)

Office of Attorney General of Arizona

1275 West Washington Street

Phoenix, AZ 85007

3

Counsel for Amicus Appellant:

Attorneys General for the States of Alaska,

Arizona, Arkansas, Kansas, Louisiana,

Mississippi, Missouri, Nevada, North Dakota,

Oklahoma, Rhode Island, Tennessee, Wisconsin.

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OPINION OF THE COURT

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AMBRO, Circuit Judge

Cases with many plaintiffs, few to none of whom will

sue solely for themselves because the costs far outweigh the

benefits, frequently result in class actions under Federal Rule

of Civil Procedure 23. Prerequisites are having (1) so many

class members that joinder is impractical, (2) questions of law

or fact that are common to the class, (3) one or more

representatives whose claims or defenses are typical of those

in the class, and (4) representatives who will fairly and

adequately protect the interests of the class. Fed. R. Civ. P.

23(a). Besides these prerequisites, a class action must satisfy

one of the subsections (1) through (3) in Rule 23(b). As

pertinent here, Rule 23(b)(2) provides that a class action may

be maintained if the requirements of Rule 23(a) are met and

“the party opposing the class has acted or refused to act on

grounds that apply generally to the class, so that final

injunctive relief or corresponding declaratory relief is

appropriate respecting the class as a whole.”

For the first time we review an order approving the

settlement of a class action certified under Rule 23(b)(2) where

the only benefit received by the class was the defendant’s

4

payment of a cy pres award to organizations the defendant

approved.1

The defendant, Google Inc., created a web browser

“cookie” that tracks an internet user’s data (think following the

trail of cookie crumbs). For some Safari or Internet Explorer

browser users, the cookie may have operated even if the user

configured privacy settings to prevent it from tracking data.

The class plaintiffs claim Google invaded users’ privacy under

the California constitution and the state tort of intrusion upon

seclusion (meaning the intrusion into a private place,

conversation, or matter in a highly offensive manner). In a

disputed Rule 23(b)(2) class settlement, Google has agreed to

stop using the cookies for Safari browsers and to pay $5.5

million to cover class counsel’s fees and costs, incentive

awards for the named class representatives, and cy pres

distributions, without directly compensating any class

members. The six cy pres recipients are primarily data privacy

organizations, and all must agree to use the funds to research

and promote browser privacy. In addition, Google would

obtain, among other things, a class-wide release of all class-

1

“The term ‘cy pres’ is derived from the Norman French

expression cy pres comme possible, which means ‘as near as

possible.’” In re Baby Prods. Antitrust Litig., 708 F.3d 163,

168 n.1 (3d Cir. 2013) (quoting Democratic Cent. Comm. v.

Washington Metro. Area Transit Comm’n, 84 F.3d 451, 455

(D.C. Cir. 1996)). The doctrine “originated in trusts-and-

estates law as a rule of construction used to preserve

testamentary charitable gifts that otherwise would fail.” Id. at

168 n.2. “When it becomes impossible to carry out the

charitable gift as the testator intended, the doctrine allows the

next best use of the funds to satisfy the testator’s intent as near

as possible.” Id. (quotation omitted).

5

member claims, including for money damages that did or could

stem from the subject matter of the litigation.

The lone objector, Theodore H. Frank, challenges the

District Court’s certification of a settlement class and the terms

of the approved settlement. He argues that the cy pres money

properly belongs to the class as compensation. He asks us to

vacate the settlement as unfair and require direct distributions

to class members before resorting to cy pres awards. In the

alternative, if direct distributions are truly infeasible, he asserts

the class should not have been certified due to inadequate

representation. Frank also challenges the parties’ choice of cy

pres recipients because of their pre-existing relationships with

Google and class counsel.

We believe that, in some Rule 23(b)(2) class actions, a

cy pres-only settlement may properly be approved. But here

the District Court’s cursory certification and fairness analysis

were insufficient for us to review its order certifying the class

and approving the settlement. The settlement agreement’s

broad release of claims for money damages and its designation

of cy pres recipients are particularly concerning. We thus

vacate the order approving the settlement and remand for

further proceedings consistent with this opinion.

I. Background

A. Prior Litigation

We outlined the facts underlying the class’s claims in In

re Google Inc. Cookie Placement Consumer Privacy

Litigation, 806 F.3d 125, 130–34 (3d Cir. 2015). In brief, news

broke in early 2012 that a Stanford graduate student had

discovered Google’s Doubleclick.net cookies were bypassing

Safari and Internet Explorer privacy settings and tracking

internet-user information. Google settled the resulting Federal

6

Trade Commission and state attorneys general lawsuits,

agreeing to cease the practice and to pay a combined $39.5

million in fines, though admitting no past acts or wrongdoing.

Plaintiff internet users also filed claims against Google that

were later consolidated into a putative class action. The class

complaint alleged violations of federal privacy and fraud

statutes, California unfair competition and privacy statutes, the

California constitution’s right to privacy, and that state’s

privacy tort law. It sought injunctive and monetary relief.

Google moved to dismiss, and the District Court granted the

motion in full. On appeal we affirmed the dismissal of all but

the California constitutional and tort claims. See id. at 153.

B. Proposed Settlement

On remand, the parties began discovery. They then

sought to avoid further litigation and began mediation before a

former federal judge. With the help of the mediator, the parties

agreed to a settlement (the “Settlement Agreement”) and

simultaneously moved for certification of a Federal Rule of

Civil Procedure 23(b)(2) class and approval of the settlement

under Federal Rule of Civil Procedure 23(e). The latter states

that “claims, issues, or defenses of a certified class . . . may be

settled, voluntarily dismissed, or compromised only with the

court’s approval.” Fed. R. Civ. P. 23(e). It also lays out the

procedures that apply to any such settlement, dismissal, or

compromise. Id.

The proposed settlement defines the class as all persons

in America who used Safari or Internet Explorer web browsers

and “who visited a website from which Doubleclick.net . . .

cookies were placed by the means alleged in the Complaint,”

excluding individuals who had already obtained relief from

Google or submitted “a valid and timely Request for

Exclusion.” Settlement Agreement §§ 2.3, 2.5 (defining

“Class” and “Class Member”). In sweeping language, the

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settlement would release all class member claims, including for

damages, that did or could stem from, or relate to, the subject

matter of the litigation. Settlement Agreement § 2.25

(“Released Claims”).

In exchange, Google would be required to assure it had

“implemented systems configured to” abate or delete all third-

party Google cookies that exist in Safari browsers. Settlement

Agreement § 5.1 (“Assurance of Remediation”). And as noted,

it would also pay $5.5 million, to be divided among the

settlement administrator, class counsel, the named class

representatives, and cy pres recipients. Settlement Agreement

§ 5.2 (“Settlement Fund”).

The Settlement Agreement requires both parties to

agree to the cy pres recipients. The class must propose up to

ten options, and Google may strike any for a non-arbitrary

reason and request a replacement. Settlement Agreement § 5.3

(“Cy Pres Recipients”). The chosen recipients must agree “to

devote the funds to promote public awareness and education,

and/or to support research, development, and initiatives,

related to the security and/or privacy of Internet browsers.” Id.

The parties ultimately agreed on six recipients: (1) the

Berkeley Center for Law & Technology; (2) the Berkman

Center for Internet & Society at Harvard University; (3) the

Center for Democracy & Technology (Privacy & Data

Project); (4) Public Counsel; (5) the Privacy Rights

Clearinghouse; and (6) the Center for Internet & Society at

Stanford University. Neither Frank nor the District Court were

privy to the selection process.

C. Class Action Settlements

The settlement of a putative class action requires the

approval of a district court, both for certifying the class and for

determining whether the settlement is “fair, reasonable and

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adequate.” Halley v. Honeywell Int’l, Inc., 861 F.3d 481, 488

(3d Cir. 2017). We have provided guidance on the factors a

court should consider in deciding whether to approve class

action settlements, most notably the Girsh factors2 and the

Prudential factors.3 Where, as here, the parties seek

2

The Girsh factors, which a court must apply, are: “(1) the

complexity, expense and likely duration of the litigation; (2)

the reaction of the class to the settlement; (3) the stage of the

proceedings and the amount of discovery completed; (4) the

risks of establishing liability; (5) the risks of establishing

damages; (6) the risks of maintaining the class action through

trial; (7) the ability of the defendants to withstand a greater

judgment; (8) the range of reasonableness of the settlement

fund in light of the best possible recovery; [and] (9) the range

of reasonableness of the settlement fund to a possible recovery

in light of all the attendant risks of litigation.” Girsh v. Jepson,

521 F.2d 153, 157 (3d Cir.1975) (quoting City of Detroit v.

Grinnell Corp., 495 F.2d 448, 463 (2d Cir. 1974)) (internal

ellipses omitted).

3

The Prudential factors, which a court may apply if relevant,

are: (1) “the maturity of the underlying substantive issues . . .

the development of scientific knowledge, the extent of

discovery on the merits, and other factors that bear on the

ability to assess the probable outcome of a trial on the merits

of liability and individual damages”; (2) the “existence and

probable outcome of claims by other classes and subclasses”;

(3) “the comparison between the results achieved by the

settlement for individual class or subclass members and the

results achieved—or likely to be achieved—for other

claimants”; (4) “whether class or subclass members are

accorded the right to opt out of the settlement”; (5) “whether

any provisions for attorneys’ fees are reasonable”; and (6)

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simultaneous class certification and settlement approval, courts

should be “even more scrupulous than usual when they

examine the fairness of the proposed settlement.” Prudential,

148 F.3d at 317 (quotation omitted). This heightened standard

is designed to protect the interests of all class members. Id.

Some class action settlements also require the sending

of notice to members of the putative class. Before approving

the settlement of a class action certified under Rule 23(b)(3),

which is primarily used to pursue money-damages class

actions,4 a court “must direct to class members the best notice

that is practicable under the circumstances, including

individual notice to all members who can be identified through

reasonable effort.” Fed. R. Civ. P. 23(c)(2)(B). For class

actions certified under Rule 23(b)(1), which is often used to

pursue class actions involving a common fund for injured

stakeholders,5 or Rule 23(b)(2), which is used to pursue

“whether the procedure for processing individual claims under

the settlement is fair and reasonable.” In re Prudential Ins. Co.

Am. Sales Practice Litig., 148 F.3d 283, 323 (3d Cir. 1998).

4

Rule 23(b)(3) provides that a class action may be maintained

if the requirements of Rule 23(a) are met and “the court finds

that the questions of law or fact common to class members

predominate over any questions affecting only individual

members, and that a class action is superior to other available

methods for fairly and efficiently adjudicating the

controversy.”

5

Rule 23(b)(1) provides that a class action may be maintained

if the requirements of Rule 23(a) are met and prosecuting

separate actions would create a risk of (1) “inconsistent or

varying adjudications with respect to individual class members

that would establish incompatible standards of conduct for the

party opposing the class,” or (2) “adjudications with respect to

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injunctions in class actions, the Rules do not impose the same

mandate of notice; rather, they state the court “may direct

appropriate notice to the class.” Fed. R. Civ. P. 23(c)(2)(A);

see also Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338, 363

(2011). Of course, regardless what these rules say, the

procedures for class action settlement—including the notice

procedures—must also comply with due process requirements.

See In re Nat’l Football League Players Concussion Injury

Litig., 821 F.3d 410, 435 (3d Cir. 2016); see also Dukes, 564

U.S. at 362.

C. District Court Proceedings

The District Court preliminarily certified the class for

settlement under Rule 23(b)(2). Following a notice period, the

Court received fifty exclusion requests and one timely

objection. Frank, the sole objector, asserted that either the

settlement was unfair because it improperly preferred cy pres

over direct compensation to class members, or, in the

alternative, the class could not be certified if direct

compensation was impossible. He further argued that the cy

pres recipients raised a conflict-of-interest concern because

class counsel was on one recipient’s board and Google was a

regular donor to four others. Finally, Frank challenged the

attorneys’ fees—an issue he does not raise on appeal.

To determine whether the settlement class could be

certified, the District Court conducted a hearing as required by

Fed. R. Civ. P. 23(e)(2) and heard arguments from the parties

and Frank. Following the hearing, it issued a short opinion and

individual class members that, as a practical matter, would be

dispositive of the interests of the other members not parties to

the individual adjudications or would substantially impair or

impede their ability to protect their interests.”

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final order approving class certification and the settlement. In

its opinion the Court correctly noted it could certify a class only

if the requirements of Rule 23(a) and one of the prongs of Rule

23(b) were satisfied. It stated that “no objections had been

filed” challenging class certification, then in three sentences

explained why all the requisite factors were met—without

stating what type of Rule 23(b) class was certified.

The Court then reviewed the proposed settlement for

fairness, reasonableness, and adequacy, as required by Rule

23(e)(2). That Rule provides that if a class action settlement

“would bind class members, the court may approve it only after

a hearing and only on finding that it is fair, reasonable, and

adequate.” Fed. R. Civ. P. 23(e)(2). The Court here noted that

a presumption of fairness applies to class settlements that meet

certain criteria established in our case law, but it did not make

factual findings relating to those factors or hold whether the

presumption applied in this case. It then applied the Girsh

factors in determining whether the settlement was fair,

reasonable, and adequate. Though it spent only four sentences

analyzing the entirety of Girsh’s nine factors, the Court

concluded that “the record adequately establishes” they had

been satisfied. It acknowledged additional factors to consider

under Prudential, 148 F.3d at 323, and In re Baby Prods.

Antitrust Litig., 708 F.3d 163 (3d Cir. 2013), but did not

expressly apply them.6

6

Baby Products instructed courts to consider further “the

degree of direct benefit provided to the class” from the

settlement, potentially including “the number of individual

awards compared to both the number of claims and the

estimated number of class members, the size of the individual

awards compared to claimants’ estimated damages, and the

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Ultimately, the Court rejected Frank’s arguments and

approved the settlement. It found that “the nature of the likely

compensation to the class members has always been

complicated by the substantial problems of identifying the

millions of potential class members[7] and then of translating

their alleged loss of privacy into individual cash amounts.” It

further found that “payments to absent class members would

be logistically burdensome, impractical, and economically

infeasible, resulting (at best) with direct compensation of a de

minim[i]s amount.” Because the cy pres money would be used

by “preeminent institutions for researching and advocating for

online privacy” to promote Internet browser privacy, it held

that the cy pres awards “bear a direct and substantial nexus to

the interests of absent class members.” In one sentence, the

Court noted Frank’s objections to the pre-existing relationships

between Google, class counsel, and the cy pres recipients, but

held “no conflict of interest” had “undermine[d] the selected

cy pres recipients.”

Frank timely appealed.

claims process used to determine individual awards.” 708 F.3d

at 174.

7

In its brief, Google asserts that because many people

download Doubleclick.net cookies while browsing the internet

and there is no meaningful way to distinguish cookies

downloaded “by the means alleged in the Complaint” rather

than by other, unobjectionable means, it would be

exceptionally difficult, and perhaps impossible, for anyone to

determine who is a class member. Google Br. at 19. At the

fairness hearing, Judge Robinson also stated she “believe[d]

this has always been a case in which the facts preclude direct

individual compensation.”

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II. Discussion

A. Article III Standing

After oral argument, we held this appeal in abeyance

pending the Supreme Court’s resolution of Frank v. Gaos,

which also involved a cy pres-only class action settlement

involving alleged privacy violations by Google. 139 S. Ct.

1041, 1043–44 (2019). But the Gaos Court did not review the

class action settlement in that case. Instead, in a per curiam

opinion it vacated the settlement and remanded under its

decision in Spokeo, Inc v. Robins, in which it clarified the

“concreteness” requirement of the injury-in-fact prong of

Article III standing, holding that a “bare procedural violation”

of the Fair Credit Reporting Act was not sufficiently

“concrete” to establish standing. 136 S. Ct. 1540, 1549–50

(2016); Frank, 139 S. Ct. at 1046.

After Gaos was issued, we requested supplemental

briefing from the parties on whether plaintiffs adequately

alleged a “concrete injury” for purposes of Article III standing.

They here adequately did so, following our decision in In re

Nickelodeon Consumer Privacy Litigation, 827 F.3d 262, 273–

74 (3d Cir. 2016). There, in the wake of Spokeo, we considered

whether a concrete injury occurred when a website operator

stated it would not track the browser history and video-viewing

of children who visited Nick.com but then did so anyway. Id.

at 269. We held the website operator’s intrusion on the

children’s personal browsing and viewing activities was

sufficiently injurious for purposes of Article III standing. Id.

at 273–74. The allegations of standing here are

indistinguishable from those in Nickelodeon: in both cases, the

plaintiffs alleged that a third party (Viacom there, Google here)

tracked their personal internet browsing information in

violation of the third party’s own promises not to do so. Id.

The Nickelodeon decision, which considered and distinguished

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the Supreme Court’s analysis in Spokeo, dictates that we

recognize standing here.

More than precedent supports our conclusion. History

and tradition reinforce that a concrete injury for Article III

standing purposes occurs when Google, or any other third

party, tracks a person’s internet browser activity without

authorization. Privacy torts have become “well-ensconced in

the fabric of American law.” In re Horizon Healthcare Servs.

Inc. Data Breach Litig., 846 F.3d 625, 638 (3d Cir. 2017).

Indeed, as Justice Thomas has explained, private actions to

remedy intrusions on the private sphere trace back to England,

where a property owner needed only to show that another

person placed a foot on his property to establish a traditional

case or controversy. See Spokeo, 136 S. Ct. at 1551 (Thomas,

J., concurring) (citing Entick v. Carrington, 2 Wils. K.B. 275,

291 (1765)). Likewise, “Congress has long provided plaintiffs

with the right to seek redress for unauthorized disclosures of

information that, in Congress’s judgment, ought to remain

private.” Nickelodeon, 827 F.3d at 274. In an era when

millions of Americans conduct their affairs increasingly

through electronic devices, the assertion Google makes—that

federal courts are powerless to provide a remedy when an

internet company surreptitiously collects private data—is

untenable. Nothing in Spokeo or any other Supreme Court

decision suggests otherwise.

B. Jurisdiction and Standards of Review

The District Court had jurisdiction under 28 U.S.C.

§ 1332(d), and we have appellate jurisdiction under 28 U.S.C.

§ 1291. We review a district court’s decision to approve a

settlement and to certify a class for abuse of discretion. See

Baby Prods., 708 F.3d at 175. “An appellate court may find an

abuse of discretion where the district court’s decision rests

upon a clearly erroneous finding of fact, an errant conclusion

15

of law or an improper application of law to fact.” Id. (citing

Prudential, 148 F.3d at 299). However, a district court must

“make its reasoning and application of the [law] clear, so that

we, as a reviewing court, have a sufficient basis to review for

abuse of discretion.” Gunter v. Ridgewood Energy Corp., 223

F.3d 190, 196 (3d Cir. 2000); see also In re Cendant Corp.

PRIDES Litig., 234 F.3d 166, 168 (3d Cir. 2000).

C. Class Settlement Fairness

Frank raises two challenges to the proposed settlement’s

fairness, reasonableness, and adequacy under Rule 23(e)(2).

First, he argues the settlement, whose main monetary

component is a cy pres award, provides no marginal benefit to

the class and therefore cannot satisfy that Rule. Indeed, he

asserts a cy pres award is always inappropriate if some

individual class members could be compensated through a

claims or lottery process. Second, Frank challenges the

selection of the cy pres recipients due to their pre-existing

associations with either class counsel or Google.

We have identified two opposing interests a district

court must weigh when reviewing motions for settlement-only

class certification and approval of the settlement. First, we

favor the parties reaching an amicable agreement and avoiding

protracted litigation. See, e.g., In re Warfarin Sodium Antitrust

Litig., 391 F.3d 516, 535 (3d Cir. 2004). We do not wish to

intrude overly on the parties’ hard-fought bargain. See

Ehrheart v. Verizon Wireless, 609 F.3d 590, 593–95 (3d Cir.

2010). A district court thus is to presume a settlement is fair if

“(1) the negotiations occurred at arms length; (2) there was

sufficient discovery; (3) the proponents of the settlement are

experienced in similar litigation; and (4) only a small fraction

16

of the class objected.”8 NFL Concussion Litig., 821 F.3d at

436.

At the same time, a district court has an obligation as a

fiduciary for absent class members to examine the proposed

settlement with care. See, e.g., Warfarin Sodium, 391 F.3d at

535. This duty is heightened in settlement-only class cases:

“[W]here settlement negotiations precede class certification,

and approval for settlement and certification are sought

simultaneously, we require district courts to be even ‘more

scrupulous than usual’ when examining the fairness of the

proposed settlement.” Id.; see also Amchem Prods., Inc. v.

Windsor, 521 U.S. 591, 619–20 (1997) (viewing as “altogether

proper” the Third Circuit’s careful review of a settlement

class’s certification to ensure absent class members were

adequately represented). In settlement negotiations, the

interests of class representatives or class counsel do not always

align with the interests of absent class members, and prior to

certification class members may not know their claims are in

litigation or that settlement negotiations are taking place. See

In re Gen. Motors Corp. Pick-Up Truck Fuel Tank Prods. Liab.

Litig., 55 F.3d 768, 788 (3d Cir. 1995). Thus a district court’s

“scrupulous” review of the settlement terms is “designed to

ensure that class counsel has demonstrated ‘sustained

advocacy’ throughout the course of the proceedings and has

8

In its opinion the District Court recognized the fairness

presumption’s existence in the case law, but did not tie any

factual findings to the test’s factors or expressly hold whether

the presumption applied. Its preliminary order certifying the

class similarly suggested, but did not expressly hold, that the

presumption applies. Frank does not challenge the application

or misapplication of the fairness presumption, however. Given

the case’s facts and procedural posture, we assume the

presumption applies.

17

protected the interests of all class members.” Prudential, 148

F.3d at 317 (quoting GM Trucks, 55 F.3d at 805–06).

These principles, combined with the legal analyses

further described below, lead us to disagree with Frank that cy

pres-only settlements are unfair per se under Rule 23(e)(2). In

some cases a cy pres-only settlement may be proper. But we

are troubled by the District Court’s cursory certification and

fairness analysis in this case, and two features of the settlement,

discussed below, compel us to vacate and remand.

1. Cy Pres-Only Class Settlements

We have never addressed whether a class action

settlement’s monetary award may be given solely to cy pres

recipients. In the usual cy pres case, money from a class

settlement fund remains after distributions to class members,

perhaps because “class members cannot be located, decline to

file claims, have died, or the parties have overestimated the

amount projected for distribution.” Baby Prods., 708 F.3d at

169. In those cases, parties may seek to “distribute to a

nonparty (or nonparties) the excess settlement funds for their

next best use—a charitable purpose reasonably approximating

the interests pursued by the class.” Id. Cy pres is generally

preferable to escheating funds to the state or reverting them to

the defendant because it “preserve[s] the [class action’s]

deterrent effect . . . [and] (at least theoretically) more closely

tailor[s] the distribution to the interests of class members.” Id.

at 172.

Still, many federal courts, the media, academia, and

even the Chief Justice of the United States view cy pres awards

with skepticism.9 Among other things, they “present a

9

Chief Justice Roberts has voiced concerns regarding cy pres,

particularly where it constitutes a class’s only monetary relief.

18

potential conflict of interest between class counsel and their

clients” because they “may increase a settlement fund, and

with it attorneys’ fees, without increasing the direct benefit to

the class.” Baby Prods., 708 F.3d at 173. A settlement whose

only monetary distributions are to class counsel, class

representatives, and cy pres recipients, as in this case, presents

the risk of a still greater misalignment of interests: the

settlement clearly benefits the defendant (who obtains peace at

a potentially reduced cost), class counsel (who are guaranteed

payment in the settlement), and the named representatives

(who are given an incentive award in the settlement), while any

benefit to other class members is indirect and inconsequential

monetarily.

Despite cy pres’ flaws, we held in Baby Products that

“a district court does not abuse its discretion by approving a

class action settlement agreement that includes a cy pres

component directing distribution of excess settlement funds to

a third party to be used for a purpose related to the class injury.”

Id. at 172. Favorably citing the American Law Institute’s

(“ALI”) guidelines, we held that cy pres was appropriate where

some class members were compensated directly and “further

individual distributions are economically infeasible.” Id. at

173 (citing ALI, Principles of the Law of Aggregate Litigation

§ 3.07(b) (2010)). We left the door open for other permissible

forms of cy pres, id., and nowhere addressed it in the context

of a Rule 23(b)(2) class.

With this background, we now consider whether a cy

pres-only settlement in a Rule 23(b)(2) class can ever satisfy

the fairness requirements of Rule 23(e)(2), and, if so, whether

See Marek v. Lane, 134 S. Ct. 8, 9 (2013) (Roberts, C.J.,

statement respecting denial of certiorari).

19

the District Court abused its discretion in approving this

particular settlement as fair, reasonable, and adequate.

Frank’s central argument on appeal is that cy pres

awards should never be preferred over direct distributions to

class members because the settlement fund properly “belongs”

to individual class members as monetary compensation for

their injuries. He proposes that the $5.5 million settlement

fund is “sufficient to fund either a claims process or a lottery

distribution for the class,” even though he acknowledges it

would be “impossible to pay every class member.” Obj. Br.

at 9. He criticizes the District Court’s weighing of the

settlement fund against the size of the entire class because

“[e]ven in billion-dollar securities settlements where class

members have suffered substantial losses, the parties do not

know who each and every class member is and must rely upon

class members to identify themselves and the size of their loss

in a claims process.” Id. at 27–28.

We know no ruling that requires district courts to

approve only settlements that provide for direct class

distributions on these facts. Indeed, Baby Products suggested

the opposite. We reasoned that “cy pres distributions are most

appropriate where further individual distributions are

economically infeasible” and declined to prohibit cy pres

distributions in other situations, including where even an initial

distribution to some class members would be infeasible. 708

F.3d at 173. We also reaffirmed that settlement approval

should be a practical inquiry rooted in the particular case’s

facts and procedural posture—as the Girsh and Prudential

factors reflect. Id. at 173–74. Ultimately “[t]he role of a

district court is not to determine whether the settlement is the

fairest possible resolution . . . [, but rather to] determine

whether the compromises reflected in the settlement . . . are

fair, reasonable, and adequate when considered from the

perspective of the class as a whole.” Id.

20

Google further argues that this settlement fund was

never intended to compensate class members monetarily.

Rather, it claims the fund enhances the settlement’s deterrent

effect by funding data privacy institutions that will work to

prevent similar potential privacy invasions from occurring in

the future. The class representatives similarly point out that a

claims-made process or lottery geared toward individual

distributions would “not come close to addressing the Internet

privacy concerns of all class members in this case.” Class Br.

at 23.

This rationale accords with the purpose of the Rule

23(b)(2) class structure. The Supreme Court has described this

as a more “traditional” collective action because it assumes a

single, “indivisible” injunctive or declaratory remedy against

the defendant will provide relief to all class members equally.

Dukes, 564 U.S. at 361–63. A (b)(2) class therefore does not

involve individualized determinations of liability or damages,

id.,10 or even require that individual class members be

ascertainable, Shelton v. Bledsoe, 775 F.3d 554, 563 (3d Cir.

2015). Nor does certification require the “greater procedural

protections” of (b)(3) classes, such as the opportunity for

individual class members to receive notice of the action or the

opportunity to opt out. See Dukes, 564 U.S. at 362. To certify

a (b)(2) class, a court must simply find that “the party opposing

the class has acted or refused to act on grounds that apply

generally to the class, so that final injunctive relief or

corresponding declaratory relief is appropriate respecting the

class as a whole.” Fed. R. Civ. P. 23(b)(2). In other words, the

class must be “cohesive” such that the members “have strong

10

In fact, a non-settlement (b)(2) class cannot be certified if it

brings claims for monetary relief that are more than

“incidental.” Dukes, 564 U.S. at 360.

21

commonality of interests.” Gates v. Rohm & Haas Co., 655

F.3d 255, 263–64 (3d Cir. 2011).

Contrary to Frank’s arguments, then, we see no reason

why a cy pres-only (b)(2) settlement that satisfies Rule 23’s

certification and fairness requirements could not “belong” to

the class as a whole, and not to individual class members as

monetary compensation. Direct monetary distributions

typically would not accomplish the purpose of a (b)(2) class.

It is not an inherent abuse of discretion for a district court to

allow a cy pres-only settlement rather than random

compensation, and possibly even overcompensation through a

lottery, of some (b)(2) class members to the exclusion of

others.

2. Review of the District Court’s Settlement

Approval

This brings us to the Settlement Agreement. District

courts are to assess the fairness, reasonableness, and adequacy

of a cy pres award under Rule 23(e)(2) using “the same

framework developed for assessing other aspects of class

action settlements”: namely, applying the Girsh factors;

applying the Prudential factors where applicable; and also

considering “the degree of direct benefit provided to the class,”

which may include “the number of individual awards

compared to both the number of claims and the estimated

number of class members, the size of the individual awards

compared to claimants’ estimated damages, and the claims

process used to determine individual awards.” Baby Prods.,

708 F.3d at 174. “[C]y pres awards should generally represent

a small percentage of total settlement funds” unless a district

court finds “sufficient justification.” Id.

In its opinion approving the Settlement Agreement, the

District Court ran through the Girsh factors and held that all

22

nine were satisfied, but in a more perfunctory fashion than we

are accustomed to reviewing on appeal. It also acknowledged

the additional factors we suggested district courts consider in

Prudential, 148 F.3d at 323, and Baby Products, 708 F.3d at

174, but did not explicitly apply them.

In this context, we are not persuaded the Court

sufficiently assessed the fairness, reasonableness, and

adequacy of the settlement. In particular, two features of the

settlement present concerns that were not adequately

considered by it: the broad class-wide release of claims for

money damages, and selection of the specific cy pres

recipients.

a. Class-wide Release

The Settlement Agreement purports to release all class

member claims, including for damages, that did or could stem

from, or relate to, the subject matter of the litigation. This

raises a red flag. Before the District Court, class counsel

acknowledged that the dismissal of all claims providing for

statutory damages made class certification more difficult. See

District Court Docket, ECF No. 163 (Motion for Preliminary

Approval of Class Action Settlement) at 15. That premise, in

turn, shaped the structure of both class certification and class

notice: the parties sought to certify an injunction class under

Rule 23(b)(2), not a damages class under Rule 23(b)(3), see

District Court Docket, ECF No. 163, and thus avoided the

heightened certification and notice requirements that apply to

the latter. See Fed. R. Civ. P. 23(b)(3) (requiring

predominance and superiority); Fed. R. Civ. P. 23(c)(2)(B)

(requiring “the best notice that is practicable under the

circumstances” for 23(b)(3) settlements).

Yet having sidestepped these requirements, Google and

class counsel nonetheless obtained—for themselves anyway—

23

the precise benefits that a Rule 23(b)(3) class gives to the

defendant and class counsel: namely, a broad class-wide

release of claims for money damages for the defendant, and a

percentage-of-fund calculation of attorneys’ fees for class

counsel. The District Court’s failure to scrutinize this

troubling aspect of the Settlement Agreement prevents us from

reviewing its fairness, reasonableness, and adequacy. See

Gunter, 223 F.3d at 196 (district court’s reasoning and

application of the law must be clear enough to provide basis

for review). We also question, and leave to the District Court

on remand, whether a defendant can ever obtain a class-wide

release of claims for money damages in a Rule 23(b)(2)

settlement, and if so, whether a release of that kind requires a

heightened form of notice either under Rule 23(c)(2)(B) or due

process tenets. Cf. NFL Concussion Litig., 821 F.3d at 435

(noting that class action notice must comply with due process);

see also In re Payment Card Interchange Fee & Merchant

Discount Antitrust Litig., 827 F.3d 223, 236 (2d Cir. 2016)

(reversing district court’s approval of Rule 23(b)(2) settlement

with broad release); Koby v. ARS Nat’l Servs., 846 F.3d 1071,

1079 (9th Cir. 2017) (same).

b. Cy Pres Recipients

The District Court held that “the proposed cy pres

distributions are appropriately tailored and focused.” It found

the selected cy pres recipients to be “among the preeminent

institutions for researching and advocating for online privacy,”

and that they would properly be required to use the funds for

internet browser privacy initiatives. Id. Because “this case is

about Google’s alleged circumvention of Internet browser

privacy settings,” it concluded, the proposed cy pres

distributions thus “bear a direct and substantial nexus to the

interests of absent class members.” The Court made no finding

that the class’s nationwide nature was reflected in the

geographical scope of cy pres recipients’ work. See, e.g.,

24

Schwartz v. Dallas Cowboys Football Club, Ltd., 362 F. Supp.

2d 574, 576 (E.D. Pa. 2005) (“In [reviewing cy pres awards],

the court should consider . . . the geographic scope of the

case.”). However, the record shows they overlap; the

promotion of better online privacy inherently has nationwide

effects.

In sum, on the District Court’s review of the record, the

proposed cy pres awards would be used for a purpose directly

and substantially related to the class’s interests. The record

also reflects that the geographic scope of the class corresponds

to that of the cy pres recipients. The Court held the proposed

cy pres awards were fair, reasonable, and adequate when

viewed “from the perspective of the Settlement Class as a

whole.” Although other aspects of its analysis were unusually

brief, the Court did not abuse its discretion by approving this

(b)(2) class settlement’s cy pres structure.

Yet we are troubled here by the selection of the specific

cy pres recipients. Frank challenges the selection of those

recipients as unfair under Rule 23(e)(2) due to pre-existing

associations between them and class counsel or Google. He

asserts that Google has long ties to Stanford and is a regular

donor and cy pres payor to the Berkeley Center for Law &

Technology, the Berkman Center for Internet & Society at

Harvard University, the Center for Internet & Society at

Stanford University, and the Center for Democracy &

Technology. One of the lawyers representing the class is also

a board member of Public Counsel.

We have not previously addressed when a prior

relationship between a cy pres recipient and one of the litigants

in a class action undermines the proposed settlement’s fairness.

Regardless of the relevant standard, however, the District

Court’s treatment of the question warrants remand. It

conducted no fact finding, either through additional filings or

25

an evidentiary hearing, to determine the nature of the

relationships between the cy pres recipients and Google or

class counsel. In its opinion, the Court misstated the nature of

Frank’s objections, stating he “takes the position that any

relationship between a party (and its counsel) and a proposed

cy pres recipient automatically disqualifies the proposed cy

pres recipient.” It then dismissed the issue in a single sentence

with no analysis, holding that “no conflict of interest” had

“undermine[d] the selected cy pres recipients.” This is not the

“scrupulous” examination required of a court acting as a

fiduciary for absent class members. See Warfarin Sodium, 391

F.3d at 534; see also Gunter, 223 F.3d at 196.

We further hold that, if challenged by an objector, a

district court must review the selected cy pres recipients to

determine whether they have a significant prior affiliation with

any party, counsel, or the court. A settlement should not be

approved if such a prior affiliation “would raise substantial

questions . . . whether the selection of the recipient was made

on the merits.” ALI, Principles of the Law of Aggregate

Litigation § 3.07 cmt. b. The parties seeking settlement

approval bear the burden of explaining to a court why the cy

pres selection was fair, which may include describing the

nature of any prior affiliations; what role, if any, each

affiliation played in the cy pres selection process; whether

other recipients were sincerely considered; and why these

recipients are the proper choice. As always, “[w]here a court

fears counsel is conflicted, it should subject the settlement to

increased scrutiny.” Baby Prods., 708 F.3d at 173.

On remand, the District Court should consider whether

these cy pres recipients have significant prior affiliations with

Google, class counsel, or the Court, and, if so, whether the

selection process failed to satisfy Rule 23(e)(2) by raising

substantial questions whether the recipients were chosen on the

merits. Where, as here, the only benefit to class members is a

26

cy pres award, parties may also want to involve class members

or a neutral participant in the selection of recipients to ward off

any appearance of impropriety.

D. Class Certification

Frank asserts that, even if his settlement fairness

challenge fails, reversal is still appropriate on class-

certification grounds. If a settlement will not confer a

meaningful benefit to absent class members, he argues it must

fail to satisfy Rule 23(a)(4) and (g)(4). Those Rules provide

that a class’s representative plaintiffs and counsel,

respectively, must “fairly and adequately” represent the

interests of the class. Frank contends that a cy pres-only

settlement in these circumstances confers no benefit on the

class, which inherently shows that the class representative and

counsel failed to represent the class fairly and adequately. For

this reason, he claims a cy pres-only settlement class cannot be

certified due to inadequate representation.

Frank’s class certification challenge is not really an

alternative ground for reversal. It is predicated on his

challenge to the settlement. In light of our decision to remand,

we leave to the District Court whether to reconsider Frank’s

contentions concerning the propriety of class certification in

light of its further consideration and potential factfinding.

* * * * *

The vista view of this case is not pretty. According to

the complaint, an internet behemoth with unprecedented tools

for monitoring private conduct told millions of Americans it

would not track their personal browser history, and then it did

so anyway to profit from the data. Through the proposed class-

action settlement, the purported wrongdoer promises to pay a

couple million dollars to class counsel and make a cy pres

27

contribution to organizations it was already donating to

otherwise (at least one of which has an affiliation with class

counsel). By seeking certification under Rule 23(b)(2), the

defendant and class counsel avoid the additional safeguards

that apply to Rule 23(b)(3) actions. One might think this would

leave room for class members to pursue damages individually;

yet that relief is foreclosed as well, as the settlement contains a

nationwide release of claims for money damages that arose or

could arise were there unauthorized snooping, presumably

covering tens if not hundreds of millions of Americans. In this

context, we believe the District Court’s factfinding and legal

analysis were insufficient for us to review its order certifying

the class and approving the fairness, reasonableness, and

adequacy of the settlement. We thus vacate and remand for

further proceedings in accord with this opinion.

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